1. Field of the Invention
The present invention generally relates to the shipping or mailing of items from one place to another. More particularly, the present invention relates to a system and method for arranging shipment and insurance for an item that is being shipped or mailed.
2. Description of the Related Art
Internet commerce has become an increasingly popular form of commerce in the United States and throughout the world. In general, Internet-based commerce, often referred to as e-commerce, provides advantages to both suppliers and consumers. E-commerce provides vendors and service providers the ability to greatly increase their sales channel and distribution network with minimal cost. An Internet commerce site provides a convenient, effective and secure mechanism for potential buyers to browse, select and purchase goods or services in an easy and simple fashion.
However, Internet retailers face many obstacles to turning a profit. Chief among these obstacles are high shipping costs. For example, assuming an online retailer of compact disks (CDs) based in California sells a CD to a customer in New York for $12. The customer may be unwilling to pay $3 (i.e., 25% of the sales price) for shipping. Internet retailers of consumer goods such as CDs, videos, and consumables face a more difficult challenge than retailers of more expensive items such as jewelry. Consumers are less likely to object to paying a $3 shipping charge for a $100 necklace than for a $12 CD.
Taxes combine with shipping costs to influence online consumer purchasing decisions. Currently, many Internet retailers do not charge their customers sales tax, which tends to offset the high shipping costs to some extent. However, sales tax is typically less than 10% of the sales price, so shipping costs still pressure Internet retailers to lower their prices more than traditional brick-and-mortar retail stores. Furthermore, the future of current moratoriums on Internet sales taxes remains uncertain. It is likely that traditional brick-and-mortar retailers will exert considerable pressure on federal and state governments to “even the playing field” by forcing Internet retailers to pay some sort of Internet sales tax. For this reason, the importance of reducing shipping costs may become even more critical in the near future. Of course, reduced shipping costs may also benefit non-Internet businesses and consumers in general.
Many consumers also regard the insurance costs as being too high, further adding to the overall cost of the product. This is especially true when the shipping and insurance costs account for a substantial percentage of the product costs. For example, many consumers may object to paying $3 in shipping charges and $1 for insurance costs when they purchase a $12 music CD. Thus, an improved system and method for arranging shipment and insurance for an item that is being shipped or mailed is needed.